Alberta is the only province in Canada without a provincial sales tax. Goods and services are charged only the federal 5% Goods and Services Tax (GST). The Fraser Institute refers to this as the “Alberta Advantage”, part of a combination of low tax rates that historically made Alberta the lowest taxed provinces in Canada. While Alberta’s income tax was eventually increased in 2015, the province remains one of the lowest taxed provinces in Canada.
|No Provincial Sales Tax||$||0.00|
|=||Sales Taxes (5%)||$||2.50|
|Total After Taxes||$||52.50|
Alberta is known for its extensive natural resource industry primarily centred around fossil fuels. Alberta’s government owns 81% of oil and gas resources in Alberta and collects royalties from their extraction. In the 2019 fiscal year, this royalty is estimated to total $6,671 billion, or 13% of all government revenue. It is equivalent to more than 30% of all taxation revenue. As a result, Alberta does not need to charge a provincial sales tax as a source of revenue.
Many other governments of resource-rich regions have similar initiatives. Alaska has the Alaska Permanent Fund that issues annual dividends to Alaska residents. Norway has the world’s largest sovereign wealth fund with assets in excess of $1 trillion USD. Because of their natural resources, Alberta and these other regions are able to provide economic incentives to their citizens without additional taxation.
There are two types of exemptions for GST: direct exemptions and zero-rated goods and services. The difference is related to how businesses handle costs related to the exemptions, but as a consumer, you would not have to pay GST on items from either category.
Goods and services that are zero-rated from GST include:
Goods and services that are directly exempt from GST include:
While Alberta does not have a provincial sales tax, the federal 5% Goods and Services Tax (GST) still applies. The GST is expected to bring $40.8 billion in tax revenue during the 2019 fiscal year. This amounts to 14.2% of total tax revenue on the federal level. This is almost double the amount Canada spends on national defence every year.